Vivos Therapeutics Q2 2025 Earnings Call Transcript

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August 19, 2025

Key Takeaways

  • Positive Sentiment: Completed acquisition of the Sleep Center of Nevada on June 10, 2025, marking a strategic pivot from legacy VIP enrollment to provider-based alliances.
  • Neutral Sentiment: Second quarter revenue declined 6% to $3.8 M due to transition costs and reduced VIP enrollment, partially offset by a $0.5 M increase in sleep testing services from SCN.
  • Negative Sentiment: Operating loss widened to $4.9 M in Q2, driven by approximately $1.8 M in one-time costs tied to SCN’s acquisition and integration.
  • Neutral Sentiment: Raised $11.5 M net from debt and equity financing (including support from Seneca Partners) to fund the SCN acquisition and future growth initiatives.
  • Positive Sentiment: Deployed 1.5 Sleep Optimization (SO) teams with plans to expand to 3.5 teams by year-end, each expected to process ~250 patients/month and generate over $500 K in monthly net collections at >50% margins.
AI Generated. May Contain Errors.
Earnings Conference Call
Vivos Therapeutics Q2 2025
00:00 / 00:00

There are 5 speakers on the call.

Operator

Good day, everyone, and welcome to the VIVO Second Quarter twenty twenty five Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow management's remarks. This conference call is being recorded and a replay of today's call will be available on the Investor Relations section of VIVO's website and will remain posted there for the next thirty days. I will now hand the call over to Mr.

Operator

Brad Ammon, Chief Financial Officer, for introductions and the reading of the Safe Harbor statement. Please go ahead.

Speaker 1

Thank you, operator. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com. With me on the call today is Kirk Huntsman, VIVO's Chairman and Chief Executive Officer. Today, we'll review the financial results for the second quarter twenty twenty five as well as more recent developments and VIVO's plans for the rest of the 2025 and beyond.

Speaker 1

Following these formal remarks, we will be happy to take questions. I would like to remind everyone that today's call will contain forward looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward looking statements. These statements involve significant known and unknown risks that are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control. Actual results, including without limitation, the results of VIVOS' growth strategies, operational plans including sales, marketing, distribution, medical sleep provider acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue, as well as future potential results of operations or operating metrics such as the potential for to achieve future positive cash flows or profitability and other matters to be addressed by VIVO's management in this conference call may differ materially and adversely from those expressed or implied by such forward looking statements.

Speaker 1

Factors that could cause actual results to differ materially include, but are not limited to, risk factors described in other disclosures contained in VIVUS' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10 ks for the year ended 12/31/2024, and our other filings with the SEC, including our second quarter ten Q, which was filed today with the SEC, all of which are or will be accessible on the Investor Relations section of website as well as the SEC website. Except to the extent required by law, VIVOS assumes no obligation to update statements as circumstances change. Finally, please be aware that the U. S. Food and Drug Administration has given certain specific VIVOS appliances five ten clearance to treat mild to severe OSA.

Speaker 1

With the FDA clearance of certain VIVUS products for severe OSA in November 2023, treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off label at the clinical discretion of the treating doctor and is now an integral part of the VIVOS treatment protocol. Treatment of OSA of any severity or any other condition with any other Veevos FDA cleared devices remains at the clinical discretion of the treating doctor. For further information on our results for the three and six month periods ended 06/30/2025, please see our earnings release, which was distributed earlier today and our quarterly report on Form 10 Q, which is available on the SEC filings portion of the Investor Relations section of our website. In the 2025, VIVOS achieved a major milestone in our pivot of our sales, marketing and distribution model to focus on sleep center provider based alliances and acquisitions. With our 06/10/2025 acquisition of the Sleep Center of Nevada.

Speaker 1

Kirk will discuss the exciting progress we have made to date on SCN and its importance to Vevos. While this was occurring, we continued to wean ourselves off of our legacy VIP enrollment revenue. The combination caused us to experience some expected increases in costs much of which related to SCN and declines in VIP enrollment revenue where VIPs pay VIVOS to get trained. For the 2025, we saw a slight decrease in revenue down about 6% to 3,800,000 compared to $4,100,000 in 2024. The decline in revenue reflects additional expenses related to the transition and integration of our SCN into our operations.

Speaker 1

On the product side, appliance discounts impacted product sales by $600,000 However, we saw a silver lining as our guide sales picked up offsetting the decrease by $05,000,000 In services, while VIP enrollment revenue declined by $1,000,000 in the second quarter, we made significant gains elsewhere. Importantly, we saw an immediate $500,000 uplift in sleep testing service revenue attributable to SCN and that's just for the period from June 10, was the SCN closing through the end of the quarter. We are very encouraged by this. We saw a $400,000 boost in sponsorship, seminar and other service revenue as well. Looking at the 2025, our revenue decreased by $600,000 to $6,800,000 compared to the same period in 2024.

Speaker 1

This 9% decline was primarily due to our an expected $1,700,000 drop in VIP enrollment revenue as we pivoted away from our legacy VIP focused model. However, the expected decline in enrollment revenue was partially offset by increases in sleep testing revenue of $05,000,000 from SCN as noted and increases in sponsorship and seminar revenue of $05,000,000 Our oral appliance sales also tell an interesting story. In second quarter, we sold 4,116 Arches for $1,900,000 a 5% revenue decrease from 2024. This shift reflects our higher volume of guide sales, which generate lower revenue compared to our more advanced care appliances. Cost of sales and operating expenses increased significantly, primarily due to our acquisition and integration of Sleep Center of Nevada.

Speaker 1

The closing of the transaction and integration of SCN led to higher quarter over quarter professional fees, personnel costs and infrastructure expenses. The primary cause of this increase was approximately $1,800,000 in costs associated with acquiring and integrating SCN including professional fees of about $900,000 salaries and wages of approximately $500,000 and infrastructure costs of approximately $300,000 Our operating loss widened to $4,900,000 in second quarter and $8,800,000 for the 2025, reflecting these higher expenses and lower revenues during our strategic transition. On the cash flow front, we used more cash in operations and investing activities compared to last year, largely due to our acquisition efforts and increased net loss. However, as we secured significant debt in equity financing providing us with $11,500,000 in net cash from financing activities. Of note, the equity financing came from an affiliate of our existing significant investor Seneca Partners.

Speaker 1

As of 06/30/2025, our balance sheet showed total liabilities of $21,500,000 with cash and cash equivalents of $4,400,000 and stockholders' equity of $4,600,000 In summary, while we are seeing some short term impacts on our financials, these numbers reflect our ongoing transition and investment in the future of our company, particularly through the SCN acquisition, which we are extremely encouraged by both on its own and as a catalyst to our exploration of similar acquisitions and similar sleep provider collaborations. We believe these strategic moves are setting the stage for stronger performance in the upcoming quarters. For more detailed information, I refer you to our earnings release and to our full Form 10 Q filed earlier today. And with that, I'll hand the call over to our Chairman and CEO, Kirk Henson.

Speaker 2

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. The 2025 was a period of significant change for VIVOS and the culmination of nearly two years of laying the groundwork for our new model. As previously announced, during the second quarter and subsequently, we completed the acquisition of the Sleep Center of Nevada, which we refer to as SCN, and have been rapidly ramping up our operations there. Generally speaking, what we found there since closing the transaction in early June has been extremely encouraging and above our forecast.

Speaker 2

First, the level of cooperation and buy in from the existing medical team and support personnel in Nevada has exceeded our expectations. In fact, two of the lead sleep MDs at SCN and their families were among our very first patients. Having the full and unwavering endorsement of the medical team at SCN who have been waiting for a viable alternative option for CPAP for their patients is critical to the ultimate success of our model. Second, there appears to be far more OSA patients interested and willing to accept VIVO's treatment as alternatives to CPAP than we had forecast. So much so that we are already working to expand our physical facilities and also to recruit, hire and train additional providers and staff in order to handle the patient demand.

Speaker 2

In that respect, to date, we have created and successfully deployed what we are calling Sleep Optimization, or SO, teams. Each SO team consists of approximately 16 medical, dental, and support staff who are all specially trained and equipped by Vivos. At present, we have deployed one and a half new sleep optimization teams that will help drive the growth of each center. By forming discrete SO teams, we believe we can optimize productivity and collaboration among providers and staff. The primary focus of each SO team is to ensure that each and every patient is fully informed and educated about all treatment options and what might be best for their condition and situation, and then to assist them in getting into their treatment of choice, which most of the time involves Vivo's products and services.

Speaker 2

In light of this progress and the growth that it portends, we worked hard to secure significant financing to fund the acquisition and to support the current and future growth of the company. As our growth trajectory continues to rise and as other similar acquisition and affiliation opportunities materialize, we fully expect to raise additional growth capital to fund that growth. Now let me return to our core message and provide you with further details on our progress at SCN and why we believe it portends well for our business model. As we've mentioned, the integration of SCN is well underway, with two locations already integrated ahead of schedule and under budget. We began seeing patients late in the second quarter.

Speaker 2

As I just mentioned, initial patient demand has outpaced our capacity to service them. And we believe we are currently servicing significantly less than forty percent of the potential new patients being tested each month at SCN. We also believe that there are even more legacy SCN patients out there who are either dissatisfied with their CPAP units or who have discontinued their CPAP treatment altogether and are looking for alternatives. Keep in mind that well over 200,000 OSA patients have been tested and seen by SCN providers since 2019. As I just mentioned, we have currently deployed 1.5 sleep optimization or SO teams across two locations in Las Vegas.

Speaker 2

To meet the demand, we are in the process of expanding one SCN location to accommodate two full time SO teams there. In addition, we are relocating and expanding a second SCN location where we expect to have 1.5 So teams deployed during the fourth quarter of this year, bringing our total to 3.5 So teams in that market by year end. Another full SO team is expected to be deployed in the 2026, bringing our total to 4.5 SO teams across two locations. And currently believe that there is the potential to deploy up to eight total SO teams at SCN based on the current demand. Now to quantify this, based on our limited operating experience to date, we believe each fully operational SO team can process approximately two fifty patients per month, potentially generating over $500,000 in monthly net collections, with contribution margins above 50%.

Speaker 2

Obviously, there will be some ramp up times associated with each team being able to operate at optimal levels. The existing SO teams are experiencing multi week backlogs and there is a sense of urgency to onboard new SO teams as quickly as possible. As mentioned in our 10 Q filed today, we have several growth initiatives planned for the remainder of 2025, 2026 and beyond, which have the potential to further increase our growth, our current growth and also in new markets. Such initiatives include, but are not limited to, the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program, and the collaboration with certain specialty medical groups who treat patients with comorbid OSA, but who lack the ability to test, evaluate, and treat such patients within their existing practice environments. There is a usual and customary credentialing process that also affects our ability to scale, that all new providers must go through with third party payers.

Speaker 2

We are actively working with payers and our consultants to expedite that process, which we expect will take anywhere from two to six months depending on the payer. In addition to our acquisition model like SCN in Las Vegas, VIVOS has developed and refined a new collaboration management model for sleep centers not interested in being acquired. Now, unlike our 2024 strategic collaboration with Rebus Health here in Colorado, under our new and refined model, Vevos retains full operational control over the patient experience and the provision of treatment through its managed clinical practices, while collaborating with the local sleep clinic to ensure patients receive the full array of OSA treatment options. Under this new collaboration management model, in July, VIVOS executed an agreement with MI Sleep LLC, a Michigan sleep specialist entity engaged in sleep testing and OSA treatment in the greater Detroit area. We expect to have this fully operational with one full SO team deployed in the fourth quarter of this year and expect further SO teams to be deployed in 2026.

Speaker 2

We expect this new model will be very attractive to sleep center operators and owners who may not want to be acquired by us, but who are looking to grow their business and referral networks by offering a highly differentiated treatment package to OSA patients. Our M and A team continues to field calls and inquiries from both acquisition and affiliation prospects around the country. We are currently in negotiations with several potential candidates in various key markets, with one potential acquisition currently under an exclusive letter of intent. Given our experience with SCN, we believe these opportunities should be similarly accretive. In summary, we believe this initial success at SCN is a strong indication of the potential and upside of our new model.

Speaker 2

As we roll forward, we expect to continue to modify and refine the model to make it even more efficient and with potential for even better gross margins. Furthermore, we expect that this model, including both acquisitions and affiliations, is highly replicable and scalable across multiple markets. It looks to be highly accretive to top line revenue growth as well as bottom line profitability. We believe that this methodical effort, patiently executed over time, has put VIVOS in a much better position to realize the full potential of our technological advantages and industry leading products and services. And that concludes our prepared remarks.

Speaker 2

Now, we'll be happy to take questions. Operator, could you please poll for questions?

Operator

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Scott Henry from AGP. Please go ahead.

Speaker 3

Thank you and good afternoon. Certainly, really interesting pivot with these SOT teams and the medical relationship. I guess, Kirk, for starters or Brad, Q2 was a nice sequential increase from Q1, numbers we haven't seen for a little bit. How should we think about the revenue in Q3 and Q4 relative to Q2?

Speaker 2

I think the revenue will begin to track our ability to deploy these SO teams. I think you'll see a continuation of the expiration really of our old model and the replacement of the revenue with higher margin and more sustainable revenue from our new model. So as we deploy new teams and as we expand our footprint across not only Las Vegas, but other markets that we're looking at right now, I think you're going to see that begin to track. And what we tried to do here is provide investors with a way to sort of think about this with these SO teams. So that's, I think as those teams get in place and start to produce, you'll start to see our revenue growth and everything track accordingly.

Speaker 3

So this $3,800,000 Hello?

Speaker 1

Sorry. So I was just going to your first part of your question was around first quarter revenue and the growth between first and second quarter sequentially. And you're exactly right. We increased revenue around $800,000 from Q1 to Q2 to $3,800,000 and that was a 27% growth. What you'll see I think going forward is more growth on the product side of the house rather than the service side of the house, primarily because of the additional referrals from SCN into VIVO's products.

Speaker 3

Okay. That's helpful, Brad. And you did have some strength in the sleep testing services in the sponsorship line. Will those continue or will those trend back down? Just trying to get a sense of how this model comes together.

Speaker 2

So just remember that at SCN, all that they do there today and historically is test and consult with patients. So the testing revenue increase is a direct reflection of the business operations that we acquired. And I think we're just beginning to see that revenue line appear and the growth in that revenue line will continue as we bring on more testing centers, doing more tests and providing patients with more consults. Where we come into the pictures after the tests are done and those patients are referred over for treatment, that's where the treatment that we provide through our, what we call our SAMHSA centers, is our sleep and airway medicine centers. So the patients start with the medical providers, they are tested and consulted with the results of those tests, if they're positive for OSA, they're referred over to our centers to be evaluated and educated about their treatment options.

Speaker 3

Okay, great. Thanks for that color. And then on the OpEx side, OpEx was about $7,000,000 in 2Q twenty twenty five. Would we expect that to be the new elevated rate under this new model with the acquisition of Or is there some one time events within those numbers?

Speaker 1

Yes. There were some one time events in this quarter certainly because of the acquisition of SEN. We have some professional costs and more one time fees, accounting and legal fees that were more related the transaction, which will not recur. We do have salaries, about a $500,000 increase in salaries and infrastructure costs were about another $300,000 Those that $800,000 will continue, but we do have around $700,000.800000 dollars worth of costs that are non recurring that are really specific more toward the acquisition of SCN and some of the due diligence that we had to do around that and which are all more one time costs.

Speaker 3

Okay. So there's about 700 to 800 in one time. And then was SCN for the in the numbers for the full second quarter or do you or is it just part

Operator

of No.

Speaker 1

No. We we just started consolidating those at the date of close, which was June 9. So we only had 20 of activity in the quarter from SCN, generated about $500,000 of revenue from their legacy sleep center business.

Speaker 3

Okay, great. I'll jump back into the queue. Thank you for taking the questions. Thank you,

Operator

The next question comes from the line of Robert Sessions from Water Tower Research. Please go ahead.

Speaker 4

Hi. Thank you for taking my questions. I I wonder if you you talked about the SO teams. How do you go about recruiting those professionals? And is there a sort of a a timeline in your mind as to how long you can put together each team?

Speaker 2

Yeah, it's a good question. So it takes several weeks for us to put the word out and sift through the resumes that come in and evaluate the providers who apply for things. So, there's a full court press type effort to get one of these SO teams put together. But once we have the team together, we like to train them together as a team. If we can get two of them on at a time, which is I think where we're at right now, we're trying to add two more out there.

Speaker 2

So, to the extent we can train all these people at the same time, that gives us some economies of scale. But what we found is that the demand for the job demand for and the available labor pool for the positions that we're advertising for and that we're looking for seem to be very robust. We're not having any difficulty recruiting for these type positions and then we can train up the teams in fairly short order.

Speaker 4

Okay, good. You mentioned that you're always looking for opportunities for acquisition, but are you prioritizing bedding down the SCN acquisition or are you going to be opportunistic and take and look at the acquirer or partner with other sleep centers? Well, I think if

Speaker 2

we were to just sort of curtail the evaluation of other acquisition possibilities or prospects, we could spend the next ten years optimizing SCN. There's that much potential there. And honestly, we're going to continue to do that. But I believe our operations team has demonstrated the ability to walk and chew gum at the same time. And so I think what we're going to do is we've already begun hiring some strong leadership, not only nationally, think those of you who follow us note that we hired a couple of strong senior management level people, one in human relations and the other in operations.

Speaker 2

And we're going to continue to build the bench strength of our operations team so that we can go into a market, make the acquisition or affiliation, establish the SO team or teams that are necessary to get things started, and then from there, we'll just keep moving along. And we'll leave behind a capable and strong SO team or a number of teams with strong regional leadership and management. We just actually hired our first regional manager out there at SCN. And these people, they demonstrate their capabilities to lead and to sort of make things happen, then we'll continue on and continue forward. We have no shortage of opportunities to affiliate and acquire and or acquire additional SCN type groups throughout the country.

Speaker 2

And we're getting as the word has spread, we're getting calls every week, it seems like, inquiring about whether we can come out evaluate and explore opportunities really throughout the country.

Speaker 4

Yeah. I was also just following up on the SOT question. Have actually worked with SOTs before? Has there been any issues that you would consider?

Speaker 2

Yeah, that's a great question. So the senior management team here at Veevos was effectively the same senior management team that rolled out one of the very first dental service and support organizations, they're called DSOs. This is the corporate roll up of dental practices, which we began back in 1995. And we have, over the years, we have operated and managed, now they weren't called SO teams back in that day, but dental teams consisting of anywhere from 10 to 20 staff members and all of them with a common mission and purpose in coordinating various professionals. Sometimes there would be hygienists, general dentists, specialists, in that working under the same dental office.

Speaker 2

So this is something that this particular management team is extremely well suited to. We've been here before. We know how to do this. We know how to do this well. I think the fact that this operations team has brought this all about in a very short, relatively short period of time, on time, under budget and performing at the level it is right out of the gate, I think speaks volumes about our ability to execute this as we go.

Speaker 2

So, this is an experienced group of people doing something that we've done successfully in the past and we continue to we see our ability to leverage this and to take this out as something right in our wheelhouse.

Speaker 4

Right. Just another question on the balance sheet. You've taken on a bit of debt now, fairly expensive debt I think. Are there any plans to refinance that and or what maybe you can give us a run through on the financial strategy that's going forward?

Speaker 2

Well, we always are seeking to reduce the cost of capital. And we realize that the financing that we secured for SCN was very much on the expensive end of the scale. We also realized that we have a model now that we didn't have before that has a certain predictability to it and consistency, and the things that lenders or more conventional financing entities would look for. And so we're always looking to reduce our cost of capital. So I can just say that we believe we have some very good and deep relationships out there that we intend to pursue and to tap as those type of financings become available and as our model matures and grows and the predictability and confidence of it continues to evolve.

Speaker 2

So, we will continue to look for that sort of thing. And if our acquisition model continues to evolve and performance matches what we've seen already in the first little bit over time, then it opens up the door for us to do bank lending with credit facilities and all kinds of things that lower the cost of our acquisition funds even further. So we're very familiar with that type of thing and capable of doing that as we go. Yes.

Speaker 4

And there's a final question for me is, is there a sort of a level of revenues you need? At what point you think you could to be cash breakeven at what point of revenue?

Speaker 2

Well, are deploying these highly accretive and highly profitable SO teams as rapidly as we can. We have no shortage of patients. We have some constraints around the physical plant and facilities that we're operating out of right now. We're really putting a full court press effort to make sure that we expand the facilities, equip those facilities and put these teams in place as rapidly as possible, which we expect to happen early in the fourth quarter. Now, as those things unfold, we're going to be in a much better position to just to continue the growth and to see it become more predictable.

Speaker 2

And don't know, did I answer your question? I kind of got off. Yeah,

Speaker 4

mean, just wanted to, it's probably you'll have a better ideas as the quarter, next few quarters go on. So I guess it's really dependent on how quickly you recruit.

Speaker 2

Yeah, so we're, let's just say this, we are actively putting these teams in place. We think that we will be have sufficient revenue generation and profit flowing in that we should be cash flow positive sometime in the fourth quarter. We're really pushing hard for that and that's our hope right now.

Speaker 4

Okay. Thanks for all that. And I'll jump back in the queue.

Speaker 2

All right. Thank you, Robert.

Operator

There are no further questions at this time. I'd like to turn the call back to Mr. Kirk Huntsman, Chairman and CEO for closing comments. Sir, please go ahead.

Speaker 2

I just want to thank everybody. This is obviously a very pivotal time for VIVOS. We have been talking about this pivot and preparing to execute on this pivot for quite some time. Now that we've begun to really execute on our new model, we're just extremely encouraged by what we've seen so far. We just a shout out to our operations team who's done just a tremendous job of putting things together and making things happen.

Speaker 2

Like I said, I feel like we're all very pleased with what we're seeing so far. We think that this is something that we see no reason why we can't extend this out into the future on future acquisitions or affiliations. And we're just going to continue to methodically execute on our game plan. And I think the results will speak for themselves. We look forward to sharing our continued progress with everyone as we continue to execute in the remainder of 2025 and then into next year.

Speaker 2

So I want to thank everybody for being here. And I think further information will be available in our 10 Q and more details and specifics as well as in our upcoming eight ksA filing, which we'll have out in the next little while. So anyway, thank you everybody and we look forward to future reports. Thank you very much.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

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